|
MACRS Depreciation Allowances |
|||
|
Property Class |
|||
|
Year |
3-Year |
5-Year |
7-Year |
|
1 |
33.33% |
20.00% |
14.29% |
|
2 |
44.45 |
32.00 |
24.49 |
|
3 |
14.81 |
19.20 |
17.49 |
|
4 |
7.41 |
11.52 |
12.49 |
|
5 |
11.52 |
8.93 |
|
|
6 |
5.76 |
8.92 |
|
|
7 |
8.93 |
||
|
8 |
4.46 |
||
Use the following information to answer the next three questions:
Some new equipment under consideration will cost $2,600,000 and will be used for 4 years. Net working capital will experience a one time increase of $559,000 if the equipment is purchased. The equipment is expected to generate annual revenues of $1,800,000 and annual costs of $576,000. The project falls under the seven-year MACRs class for tax purposes, the tax rate is 32 percent, and the cost of capital is 12 percent. The project's fixed assets can be sold for $624,000 at the end of the project's life.
Show ALL your work.
a) What is the book value of the equipment at the end of the project's life? Round your answer to the nearest whole dollar.
b) What are the taxes on the sale of the equipment at the end of the project's life? Be sure to indicate clearly if taxes are owed or if there is a tax benefit. Round your answer to the nearest whole dollar.
c) What is the net cash flow for the last year of the project? Round your answer to the nearest whole dollar.
In: Finance
Traffic congestion seems to worsen each year. This raises the question, How much does roadway congestion cost the United States annually? The Federal Highway Administration's Highway Performance Monitoring System conducts an analysis to produce an estimate of the total cost. Drivers in the 73 most congested areas in the United States were sampled, and each driver's congestion cost in time and gasoline was recorded. The total number of drivers in these 73 areas was 128,000,000.
a. Estimate with 95% confidence the total cost of congestion in the 73 areas. (Adapted from the Statistical Abstract of the United States, 2006, Table 1082.)
b. If an organization claims that the total cost of congestion in the 73 areas is greater than $420, do you agree with it based on this sample result?
c. If an organization claims that the total cost of congestion in the 73 areas is less than $450, do you accept it based on this sample result?
Cost ($) 749 381 461 247 252 501 653 507 293 534 308 669 257 375 327 377 301 604 372 237 558 242 382 392 562 557 356 250 314 575 509 456 261 455 328 527 483 508 483 331 402 253 371 587 526 297 455 260 470 749 443 746 314 186 418 280 648 411 509 434 326 420 439 489 465 556 224 336 364 485 409 314 384 262 321 474 393 354 430 615 331 384 510 491 545 527 490 473 447 229 280 538 577 351 266 511 495 532 756 394 364 332 444 302 614 354 314 327 517 252 204 556 410 517 541 439 246 79 575 444 269 451 331 531 227 379 382 411 439 676 330 504 332 493 498 349 415 343 489 331 459 436 482 443 462 480 485 284 380 412 355 441 473 599 374 537 356 585 414 293 760 362 372 497 356 454 422 443 445 310 230 586 401 354 381 322
In: Statistics and Probability
Year A
B
0 -8,000 -8,000
1 4,500 1,900
2 4,200 3,000
3 1,800 4,000
4 1,600 5,000
Which project would you select if you used the payback, NPV and IRR
methods using a 15% discount rate and why?
In: Finance
Year A B
0 -75,000 -75,000
1 40,000 10,000
2 27,000 15,200
3 20,000 67,967
By how much should the cost of capital (discount rate) for the losing project (based on NPV) be increased or decreased in order for it to be selected over the winning project (based on NPV)?
In: Finance
Q5- Week 10
You are the audit partner at Parkville & Associates, a mid-tier
audit firm. You are responsible for the
audits of the following four independent entities for the year
ended 30 June 2018:
(a) Human Help Ltd is a non-profit entity. You have discovered that
it has not kept substantiating
vouchers or receipts for more than 55 per cent of its expenses,
excluding salaries and allowances
(2.5 marks)
(b) JJ King Ltd is a building contractor with a varying workload.
In order to compensate for the
irregularity of its contracted building projects, JJ King also
purchases large vacant blocks of land
that it later subdivides for the construction of houses and units.
JJ King then sells these on its own
account. Your analysis strongly suggests that the apportionment of
costs to houses and units sold
has been kept low to boost profits. In your opinion, this has
resulted in the overvaluation of the
unsold properties. The directors of the company do not agree and
hold to their view that the stock
of properties is correctly valued (2.5 marks)
(c) You have completed the audit of Grand Resort Ltd (Grand Resort)
for the year ended 30 June 2015.
The audit partner suggested that the value of properties on the
Gold Coast were overstated by
$16 million, a figure which was twice the level of materiality set
for the audit. As a result of
discussions with the audit committee, the CEO of Grand Resort
agreed to revise the valuations
downward by $10 million. All other issues were resolved to the
satisfaction of the audit partner,
resulting in an overall misstatement of the financial report of $6
million. The audit partner is now
considering the effect of the misstatement on the auditor’s report.
(2.5 marks)
(d) Grand Event Ltd arranges for popular overseas entertainment
artists to perform in Australia. The
band Eclipse was booked by Grand Event to play in major cities
across the country. Grand Event’s
written contract required the company to pay the band in US dollars
but, in order to reduce costs,
it did not hedge the amounts. Subsequent to year end, the
Australian dollar fell against the US
dollar and a substantial loss relating to the band’s tour was
predicted. The management of Grand
Event tried unsuccessfully to renegotiate the band’s contract and
has been unable to obtain
finance to cover the expected shortfall. Grand Event has now
cancelled the tour and expects a
substantial claim from Eclipse. It is clear to you, as the auditor,
that Grand Event does not have
the income, cash or other assets to sustain such a loss. (2.5
marks)
Required:
Assuming no amendments have been made, identify and explain the
type of auditor’s opinion required
for each issue outlined above. (10 marks, maximum 300 words)
| Issues | Audit Opinion (1 mark) | Explanation (1.5 marks) |
| (a)(/(b)/ Write 1 line about issue |
Unqualified or Qualified or Adverse or Disclaimer Audit Opinion or Unqualified Audit opinion with emphasis of matter or Unqualified Audit Opinion with other matter paragraph |
Here you will mention about why you have chosen this audit opinion and reason details |
In: Accounting
Q5- Week 10 You are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for the audits of the following four independent entities for the year ended 30 June 2018: (a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating vouchers or receipts for more than 55 per cent of its expenses, excluding salaries and allowances (2.5 marks) (b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties is correctly valued (2.5 marks) (c) You have completed the audit of Grand Resort Ltd (Grand Resort) for the year ended 30 June 2015. The audit partner suggested that the value of properties on the Gold Coast were overstated by $16 million, a figure which was twice the level of materiality set for the audit. As a result of discussions with the audit committee, the CEO of Grand Resort agreed to revise the valuations downward by $10 million. All other issues were resolved to the satisfaction of the audit partner, resulting in an overall misstatement of the financial report of $6 million. The audit partner is now considering the effect of the misstatement on the auditor’s report. (2.5 marks) (d) Grand Event Ltd arranges for popular overseas entertainment artists to perform in Australia. The band Eclipse was booked by Grand Event to play in major cities across the country. Grand Event’s written contract required the company to pay the band in US dollars but, in order to reduce costs, it did not hedge the amounts. Subsequent to year end, the Australian dollar fell against the US dollar and a substantial loss relating to the band’s tour was predicted. The management of Grand Event tried unsuccessfully to renegotiate the band’s contract and has been unable to obtain finance to cover the expected shortfall. Grand Event has now cancelled the tour and expects a substantial claim from Eclipse. It is clear to you, as the auditor, that Grand Event does not have the income, cash or other assets to sustain such a loss. (2.5 marks) Required: Assuming no amendments have been made, identify and explain the type of auditor’s opinion required for each issue outlined above. (10 marks, maximum 300 words) Issues Audit Opinion (1 mark) Explanation (1.5 marks) (a)(/(b)/ Write 1 line about issue Unqualified or Qualified or Adverse or Disclaimer Audit Opinion or Unqualified Audit opinion with emphasis of matter or Unqualified Audit Opinion with other matter paragraph Here you will mention about why you have chosen this audit opinion and reason details
In: Accounting
You are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for the audits of the following four independent entities for the year ended 30 June 2018: (a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating vouchers or receipts for more than 55 per cent of its expenses, excluding salaries and allowances (2.5 marks) (b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties is correctly valued (2.5 marks) (c) You have completed the audit of Grand Resort Ltd (Grand Resort) for the year ended 30 June 2015. The audit partner suggested that the value of properties on the Gold Coast were overstated by $16 million, a figure which was twice the level of materiality set for the audit. As a result of discussions with the audit committee, the CEO of Grand Resort agreed to revise the valuations downward by $10 million. All other issues were resolved to the satisfaction of the audit partner, resulting in an overall misstatement of the financial report of $6 million. The audit partner is now considering the effect of the misstatement on the auditor’s report. (2.5 marks) (d) Grand Event Ltd arranges for popular overseas entertainment artists to perform in Australia. The band Eclipse was booked by Grand Event to play in major cities across the country. Grand Event’s written contract required the company to pay the band in US dollars but, in order to reduce costs, it did not hedge the amounts. Subsequent to year end, the Australian dollar fell against the US dollar and a substantial loss relating to the band’s tour was predicted. The management of Grand Event tried unsuccessfully to renegotiate the band’s contract and has been unable to obtain finance to cover the expected shortfall. Grand Event has now cancelled the tour and expects a substantial claim from Eclipse. It is clear to you, as the auditor, that Grand Event does not have the income, cash or other assets to sustain such a loss. (2.5 marks) Required: Assuming no amendments have been made, identify and explain the type of auditor’s opinion required for each issue outlined above. (10 marks, maximum 300 words) Issues Audit Opinion (1 mark) Explanation (1.5 marks) (a)(/(b)/ Write 1 line about issue Unqualified or Qualified or Adverse or Disclaimer Audit Opinion or Unqualified Audit opinion with emphasis of matter or Unqualified Audit Opinion with other matter paragraph Here you will mention about why you have chosen this audit opinion and reason details
In: Accounting
Read and review chapter 31
Analyze the following case study and answer the
question bellow
CASE STUDY
Mrs. Angstrom is an 83-year-old patient who was
admitted to the hospital after she fell outside her home and broke
her hip. She has been living alone in her apartment since her
husband died 4 years ago. Mrs. Angstrom has no long-term history of
mental illness, but she has recently shown signs of cognitive
impairment and dementia, according to her neighbor Jeanine Finch,
63, who called 911 after Mrs. Angstrom’s fall. “She wanders around
outside sometimes and doesn’t always know how to get back home,”
says Mrs. Finch. “My husband and I try keep an eye out for her, but
we’ve been worried something like this might happen.”
Mrs. Angstrom will need to undergo surgery tomorrow
morning. The nurse on shift, Greg, is new at the hospital and
surprised when the supervising RN asks him to discuss advance
directives with the patient, who denies having one. When Greg
explains to Mrs. Angstrom that he needs to discuss some
confidential matters with her, she asks that Mrs. Finch, who is in
the room visiting, be allowed to stay. “I haven’t been remembering
things lately,” she says, “so I’ll rest easier if Jeanine knows
what’s going on.” Deciding that the patient’s permission is
adequate to continue, Greg explains Mrs. Angstrom’s rights and
options in regard to treatment decisions in the event that she is
unable to make such decisions on her own. Mrs. Angstrom says that
she has no living family members and that the only person she
trusts is Jeanine. “Can I put her in charge of those decisions?”
she asks.
“No,” Greg replies. “I’m sorry, but since Mrs. Finch
is not a family member, she can’t be designated to act on your
behalf. If you don’t have any family member to assign a durable
power of attorney, I think you’ll need to sign a directive to your
physician or agree to a guardianship. If you choose the
guardianship, you can revoke the decision at any time, but the
directive to a physician is binding until you legally have it
changed.”
Has Greg provided accurate information concerning Mrs.
Angstrom’s options for advance directives? If not, what’s wrong
with what he said? What options would be more appropriate to
suggest to her?
Mention at least 4 facts and 4 myth about aging, and
explain one of then.
Read and review chapter 31
Analyze the following case study and answer the
question bellow
CASE STUDY
Mrs. Angstrom is an 83-year-old patient who was
admitted to the hospital after she fell outside her home and broke
her hip. She has been living alone in her apartment since her
husband died 4 years ago. Mrs. Angstrom has no long-term history of
mental illness, but she has recently shown signs of cognitive
impairment and dementia, according to her neighbor Jeanine Finch,
63, who called 911 after Mrs. Angstrom’s fall. “She wanders around
outside sometimes and doesn’t always know how to get back home,”
says Mrs. Finch. “My husband and I try keep an eye out for her, but
we’ve been worried something like this might happen.”
Mrs. Angstrom will need to undergo surgery tomorrow
morning. The nurse on shift, Greg, is new at the hospital and
surprised when the supervising RN asks him to discuss advance
directives with the patient, who denies having one. When Greg
explains to Mrs. Angstrom that he needs to discuss some
confidential matters with her, she asks that Mrs. Finch, who is in
the room visiting, be allowed to stay. “I haven’t been remembering
things lately,” she says, “so I’ll rest easier if Jeanine knows
what’s going on.” Deciding that the patient’s permission is
adequate to continue, Greg explains Mrs. Angstrom’s rights and
options in regard to treatment decisions in the event that she is
unable to make such decisions on her own. Mrs. Angstrom says that
she has no living family members and that the only person she
trusts is Jeanine. “Can I put her in charge of those decisions?”
she asks.
“No,” Greg replies. “I’m sorry, but since Mrs. Finch is not a
family member, she can’t be designated to act on your behalf. If
you don’t have any family member to assign a durable power of
attorney, I think you’ll need to sign a directive to your physician
or agree to a guardianship. If you choose the guardianship, you can
revoke the decision at any time, but the directive to a physician
is binding until you legally have it changed.”
Has Greg provided accurate information concerning Mrs.
Angstrom’s options for advance directives? If not, what’s wrong
with what he said? What options would be more appropriate to
suggest to her?
Mention at least 4 facts and 4 myth about aging, and
explain one of then.
In: Nursing
Suppose the sales in the first year, R, are $100 and they grow every year at a growth rate of g = 10%. Also, suppose that the net margin is 40%. This means that earnings in the first year are going to be 0.4*100 = $40. Assuming that the discount rate, d, is 25%. What is the present value of earnings assuming that the company survives for 10 years?
In: Finance
If a bank account begins the year with a $50 balance, but ends the year with $55, what is the implied annual interest rate?
If interest rates are currently 5% per year, then what is the interest earned on a $200 investment in one year? (Don't enter the dollar sign
In: Finance